Imputing Income for Child Support

The Alabama Court of Civil Appeals has affirmed a trial court ruling that imputed income to the father to calculate child support, even though the court made no finding that the father was voluntarily unemployed or underemployed. The father in G.B. v. J.H., Case No. 2040065 (Ala. Civ. App. June 3, 2005) had filed a CS-41 (child support income affidavit) showing income of $252.16 per month.

Hearing evidence from the mother about the expenses the father had paid when the parties lived together, and after the father stated that he couldn’t remember the net income of the company he owned, the court imputed income to him of $500 per week and set child support accordingly. The father appealed.

The Court of Appeals first rejected the father’s argument that the trial court erred by imputing income without first finding that he was voluntarily unemployed or underemployed. Although the Court of Appeals didn’t say so, this argument would be foolish on its face. A parent could be fully employed and making every penny possible and simply lie to the court about his or her income. Of course a finding of voluntary underemployment or unemployment is not a prerequesite for imputing income.

The Court of Appeals next dealt with the father’s assertion that the trial court had used the wrong standard in imputing income to him. The father’s statement of his income was apparently based solely on the W-2 he supplied for himself, showing the amount he had caused his company to pay him as compensation.

The Court of Appeals said the trial court was justified in disregarding this figure, because the true standard of the income of a business proprietor is “gross receipts minus ordinary and necessary expenses required to produce such income.” When the father told the trial court that he “couldn’t remember” the gross income of his company (even though he personally prepared its income tax return), “the father conveniently placed the issues of the corporation’s gross receipts and its necessary (and appropriate) expenses beyond precise judicial determination.”

In our view, the circuit court could easily have discredited large portions of the father’s testimony; that court could, within its discretion, have determined that the father’s claimed ignorance of the financial affairs of his own corporation was a smokescreen designed to deprive the circuit court of probative evidence from which it could determine a just child-support award. Among the evidence that the circuit court did have was that the father had been able to afford considerable outlays for the mother and her two children before the parties’ separation, whether taken from the corporation’s assets or from his own draw, but had stopped making support payments to the mother because the mother and her alleged paramours had “cheated” him out of money. The circuit court could have concluded from the totality of the evidence that the father and/or his corporation was earning more than the father’s stated income, and that court could properly have attributed that income, pursuant to Rules 32(B)(3), 32(B)(4), and 32(B)(5), to the father. Thus, we cannot conclude that the circuit court’s judgment as to child support, which is based upon evidence received ore tenus, is due to be reversed on the basis that it is unsupported by the evidence so as to be plainly and palpably wrong (see Scholl v. Parsons, 655 So. 2d 1060, 1062 (Ala. Civ. App. 1995)).